UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK -----------------------------------------------------X
| UNITED STATES OF AMERICA |
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- against - | Case No. 23-cr-418 (MKB)
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AURELIEN MICHEL, |
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Defendant. |
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SENTENCING MEMORANDUM ON BEHALF OF AURELIEN MICHELMINTZ & GOLD LLP Ira Lee SorkinAdam K. Brody600 Third Avenue, 25th Floor New York, NY 10016Attorneys for Aurelien MichelCase 1:23-cr-00418-MKB Document 40 Filed 10/01/24 Page 1 of 21 PageID #: 175iTABLE OF CONTENTSTABLE OF AUTHORITIES ...................................................................................................... iiPRELIMINARY STATEMENT ................................................................................................. 1AURELIEN’S BACKGROUND.................................................................................................. 1OFFENSE BACKGROUND........................................................................................................ 2PROCEDURAL HISTORY......................................................................................................... 6I. THE PSR’S SENTENCING GUIDELINES CALCULATION OVERSTATES THELOSS .............................................................................................................................................. 7A. THE COURT SHOULD NOT USE GAIN AS AN ALTERNATIVE TO LOSS.............................. 7B. THE LOSS IS THE VALUE OF THE BENEFITS NOT CONFERRED........................................ 8C. THE DEVELOPERS’ ALLEGED GAIN IS NOT ACTUAL LOSS............................................. 10II. THE 18 U.S.C. § 3553(A) FACTORS FAVOR A NON-CUSTODIAL SENTENCE 12A. THE NATURE AND CIRCUMSTANCES OF THE OFFENSE AND THE HISTORY AND CHARACTERISTICS OF THE DEFENDANT WEIGH IN FAVOR OF A NON-CUSTODIAL SENTENCE ................................................................................................................................. 13 B. A NON-CUSTODIAL SENTENCE REFLECTS THE SERIOUSNESS OF THE OFFENSE, PROVIDES JUST PUNISHMENT, AND AFFORDS ADEQUATE DETERRENCE.............................. 15CONCLUSION ........................................................................................................................... 17Case 1:23-cr-00418-MKB Document 40 Filed 10/01/24 Page 2 of 21 PageID #: 176iiTABLE OF AUTHORITIESCasesGall v. United States,552 U.S. 38, 50 (2007) .............................................................................................................. 12Kimbrough v. United States,552 U.S. 85, 90 (2007) .............................................................................................................. 12United States v. Algahaim,842 F.3d 796, 800 (2d Cir. 2016).............................................................................................. 13United States v. Byors,586 F.3d 222, 225–26 (2d Cir. 2009).......................................................................................... 8United States v. Colucci,No. 23-CR-417 (GRB), 2024 WL 3643857, at *1 (E.D.N.Y. Aug. 5, 2024) ........................... 16United States v. Galtieri,No. 13-CR-00508-001, 2015 WL 5178710, at *3 (E.D.N.Y. Sept. 3, 2015)...................... 15, 18United States v. Parish,No. 13 Cr. 829 (AT), 2024 WL 3904626, at *5 (S.D.N.Y. Aug. 22, 2024) ............................. 16United States v. Romano,794 F.3d 317, 339 (2d Cir. 2015)................................................................................................ 8Statutes18 U.S.C. § 3553(a) ............................................................................................................ 1, 12, 18RulesFed.R.Crim.P. 5 .............................................................................................................................. 6Case 1:23-cr-00418-MKB Document 40 Filed 10/01/24 Page 3 of 21 PageID #: 1771Mintz & Gold LLP, by Ira Lee Sorkin and Adam K. Brody, respectfully submit this Sentencing Memorandum on behalf of Defendant Aurelien Michel (“Aurelien”), in advance of sentencing on October 15, 2024.PRELIMINARY STATEMENTAurelien did not steal nearly $3 million. Upon closer examination, the loss resulting from the fraud in this case was far less than that amount. Simply put, Aurelien and his partners sold digital artwork. All of the buyers received their digital artwork. As Aurelien’s guilty plea allocution reflects, the fraud occurred when he and his partners decided not to provide some of the additional benefits, like branded merchandise, that they had promised the buyers. Thus, the ascertainable loss in the case is the value of these additional benefits that Aurelien and his partners failed to provide.When the Court considers the harm (or lack thereof) in these terms, in conjunction with the factors set forth in 18 U.S.C. § 3553(a), a non-custodial sentence satisfies the purposes of sentencing. Accordingly, Aurelien respectfully requests that the Court impose a non-custodial sentence, which will allow him to return home to France and to lead a law-abiding life.AURELIEN’S BACKGROUNDAurelien is 26 years old. He was born February 25, 1998, in Pabu, a village in northwestern France. He was raised by his parents and grew up with his two younger brothers. His mother, Magali Michel, works for the administration of a nearby village. His father, Claude Michel, was a professional soccer player for the EA Guingamp club, based in the neighboring town of Guingamp, and now runs the youth soccer program in the area. Not surprisingly, Aurelien grew up playing soccer and played professionally at the junior level for several years as a teenager. He eventually left professional soccer to complete his high school diploma and start an e-commerceCase 1:23-cr-00418-MKB Document 40 Filed 10/01/24 Page 4 of 21 PageID #: 1782business. In 2020, Aurelien moved from France to Dubai, UAE, where he continued to work in ecommerce.OFFENSE BACKGROUND1In April 2021, the well-publicized craze2 over non-fungible tokens (“NFTs”) peaked when a technology company called Yuga Labs launched Bored Ape Yacht Club (“BAYC”), a collection of 10,000 NFTs that instantly went viral.3 The BAYC NFTs took the form of “unique iterations of … cartoon primates,” and the entire collection sold out within one day of their release, at a price of approximately $200 per BAYC NFT.4 By early January 2022, the BAYC NFT collection had generated more than $1 billion in sales.5NFTs are digital items whose creation or “minting” is recorded on a blockchain, which allows unique identification of the NFTs and prevents copying, modification, or deletion (PSR, ¶¶1 For purposes of this Sentencing Memorandum, Aurelien adopts the background on digital assets, cryptocurrency, and NFTs, as set forth in Paragraphs 4-8 of the Presentence Investigation Report, dated April 10, 2024 (“PSR”) and Paragraphs 4-5 of the Complaint (ECF Doc. No. 1 (“Compl.”)).2 See, e.g., Alyson Krueger, “How Much Real Money Can You Make From Virtual Art?” New York Times (March 12, 2022), https://www.nytimes.com/2022/03/12/style/nft-art-profit.html; see also Clive Thompson, “The Untold Story of the NFT Boom,” New York Times Magazine (May 12, 2021), https://www.nytimes.com/2021/05/12/magazine/nft-art-crypto.html (“Since the [NFT] mania touched off six months ago, the beneficiaries of this anything-goes proliferation of NFTs are, increasingly, people who are already winners in the modern attention economy, from traditional celebrities and brands to everyday people retailing a meme that generated billions of clicks and bursts of fame.”).3 About Yuga Labs, https://yuga.com/about.4 Kyle Chayka, “Why Bored Ape Avatars Are Taking Over Twitter,” The New Yorker (July 30, 2021), https://www.newyorker.com/culture/infinite-scroll/why-bored-ape-avatars-are-takingover-twitter.5 Isabelle Lee, “Sales of Bored Ape Yacht Club NFTs jump past $1 billion amid heightened interest from celebrity collectors,” Business Insider (Jan. 4, 2022), https://markets.businessinsider.com/news/currencies/bored-ape-yacht-club-nft-sales-1-billionopensea-bayc-2022-1.Case 1:23-cr-00418-MKB Document 40 Filed 10/01/24 Page 5 of 21 PageID #: 17937-8). Many NFTs are collectible pieces of digital artwork, like the BAYC collection, whose value is determined by both tangible and intangible factors, including the inherent value of the artwork, perks offered to purchasers, and online popularity; indeed, “a specific NFT or collection is only as valuable as the interest that its collectors show in it.”6In January 2022, Aurelien and his partners (collectively, “Developers”) began advertising an NFT project of their own called “Mutant Ape Planet” (“MAP”) on various social media platforms (PSR, ¶ 12). The Developers designed the MAP project as a “derivative collection” of the BAYC NFTs (PSR, ¶ 12), whose popularity and resale value had soared since their release in April 2021, as described supra.7 The MAP website advertised a collection of 9,999 NFTs, each a unique piece of digital artwork of a “mutant” cartoon ape, to be sold for 0.15 Ether8 each, or approximately $433, based on the average exchange rate of Ether to U.S. dollars in early 2022 (PSR, ¶¶ 12-13 and n. 6).In addition to the MAP NFT—the unique digital artwork itself—the MAP website advertised that the Developers would provide six benefits (“Benefits”) to the purchasers (“Purchasers”) of the MAP NFTs. The first two Benefits, designated “Pre-Mint,” i.e. before sales of the NFTs commenced, were: “$500,000 in Marketing Budget” and “NFT + Whitelist slots giveaways on our socials” (Compl., ¶¶ 13-14; PSR, ¶ 14). These “Pre-Mint” Benefits were intended to generate interest in and demand for the MAP NFT collection. The remaining four Benefits, designated “Post Sell-Out,” were: “Launch of our Merch Collection,” “Creation of a6 William Anderson, “Understanding the Cycles of Hype and Value in NFTS,” Forbes (Oct. 23, 2023), https://www.forbes.com/sites/williamanderson/article/understanding-the-cycles-of-hypeand-value-in-nfts/.7 MAP was not the only cartoon ape-themed NFT collection to follow in the footsteps of BAYC; indeed, “a number” of other derivative collections were created (PSR, ¶ 11).8 Ether is the cryptocurrency on the Ethereum blockchain (PSR, ¶ 13).Case 1:23-cr-00418-MKB Document 40 Filed 10/01/24 Page 6 of 21 PageID #: 1804MAP token with staking features (De-Fi),” “Community wallet for marketing campaigns and raffles among our holders,” and “Acquisition of Metaverse land and expansion”9 (Compl., ¶¶ 13- 14; PSR, ¶ 14).The Developers fulfilled the first two, “Pre-Mint,” Benefits before the NFTs were even sold, by spending more than $500,000 in initial marketing of the MAP NFT project and holding a number of giveaways prior to and during the MAP mint. These promotional efforts resulted in the sale of approximately 6,800 MAP NFTs. After the Purchasers received their NFTs, the Developers withdrew the proceeds of the sale, in the approximate amount of 1,020.218 ETH, or $2,921,980 (PSR, ¶ 19(b)). The Developers then spent significant sums on marketing, as they had promised to create a “[c]ommunity wallet for marketing campaigns,” in an attempt to raise the value of the MAP NFTs.10 And for a period of time, the Developers’ efforts were successful: resale prices for MAP NFTs consistently remained above the initial purchase price of 0.15 ETH for several weeks after the mint.11However, despite the initial frenzy over the purchase and sale of NFTs generally and BAYC-inspired NFT collections, interest in NFTs overall decreased by nearly 70% from a late January 2022 high to early March 2022,12 the period coinciding precisely with the MAP NFT mint. The volume of trading on major NFT marketplaces also declined precipitously during the same9 For a comprehensive description of the Metaverse, see Eric Ravenscraft, “What is the Metaverse, Exactly?” Wired (Jun. 15, 2023), https://www.wired.com/story/what-is-themetaverse/.10 See, e.g., Declaration of Adam K. Brody, dated October 1, 2024 (“Brody Decl.”), Ex. A.11 See Brody Decl., Ex. B.12 See Google Trends, https://trends.google.com/trends/explore?date=today%205- y&geo=US&q=nft&hl=en.Case 1:23-cr-00418-MKB Document 40 Filed 10/01/24 Page 7 of 21 PageID #: 1815period.13 With the collapse of the NFT market, the value of many NFT collections, including MAP, plummeted.14The violative conduct occurred when the Developers decided not to fulfill the remaining three Benefits, notwithstanding their commitment to do so. As the resale market for MAP NFTs collapsed, the Developers agreed among themselves not to launch the MAP merchandise collection, or create a MAP token, or acquire Metaverse land, but did not disclose this to the Purchasers (Transcript of Criminal Cause for Pleading Before the Hon. Vera M. Scanlon, U.S.M.J., dated Nov. 14, 2023 (ECF Doc. No. 31-1) (“Plea Tr.”), 43:9-18; 44:22-45:8). On June 4, 2022, months after the collapse of the MAP resale market, the Developers posted a message to the MAP Discord channel,15 under the pseudonym “James/Founder,” which the Developers used to communicate with Purchasers, stating: “We never intended to rug but the community went way too toxic. I recognize that our behaviour led to this ….” (Compl., ¶ 21; PSR, ¶ 20). The Developers’ use of the term “rug” referred to a “rug pull,” a cryptocurrency and NFT colloquialism to describe a situation where NFT project developers sell their NFTs to purchasers but then abandon the project either before ever delivering the NFTs or before fulfilling some other promise related to the project.1613 See Raphael Minter, “Google Trend Data for ‘NFT’ Shows Global Interest Slashed by 70%,” BeInCrypto.com (May 30, 2022), https://beincrypto.com/google-trend-data-nft-shows-globalinterest-slashed-70/.14 See Brody Decl., Ex. B.15 For a description of Discord, see “Discord 101: What is Discord?” Discord, https://discord.com/creators/what-is-discord (“Discord is a free communication app used by tens of millions of people to talk and hang out with their favorite creators, communities and friends.”).16 See “Rug Pull,” CoinMarketCap, https://coinmarketcap.com/academy/glossary/rug-pull; see also Compl., ¶ 2.Case 1:23-cr-00418-MKB Document 40 Filed 10/01/24 Page 8 of 21 PageID #: 1826PROCEDURAL HISTORYOn January 4, 2023, Aurelien was charged with wire fraud by sealed Complaint (ECF Doc. No. 1). The same day, agents from the U.S. Department of Homeland Security detained Aurelien at John F. Kennedy International Airport. On January 5, 2023, Aurelien appeared before the Hon. James R. Cho, U.S.M.J., pursuant to Fed.R.Crim.P. 5. Through counsel, Aurelien waived a preliminary hearing, pursuant to Fed.R.Crim.P. 5.1(a)(1), and the Court ordered Aurelien detained and adjourned the case to January 10 to allow counsel time to prepare a bail application (ECF Doc. No. 4).On January 10, 2023, the Hon. Taryn A. Merkl, U.S.M.J. denied Aurelien’s initial application for release on bail and ordered his detention continued. Aurelien spent the next three weeks incarcerated at Metropolitan Detention Center, until the Hon. Sanket J. Bulsara, U.S.M.J., granted his renewed application for release and ordered him released to home detention, a total of 27 days after his initial arrest (ECF Doc. No. 10). Following his release from jail, Aurelien remained under home confinement for more than six months, from February 1, 2023 through August 14, 2023, when Judge Bulsara granted his application to modify his conditions of release from home detention to a curfew under Pretrial Services’ supervision (ECF Doc. No. 23). As far as we are aware, Aurelien never violated any conditions of his release.On November 14, 2023, Aurelien pled guilty before the Hon. Vera M. Scanlon, U.S.M.J., to a single count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 371 (ECF Doc. No. 29). By Order dated November 20, 2023, this Court accepted Aurelien’s guilty plea.Sentencing was originally scheduled for May 15, 2024 (ECF Doc. No. 29). By letter dated April 26, 2024, Aurelien requested that sentencing be adjourned to a date on or after June 26, 2024 (ECF Doc. No. 37), and the Court adjourned sentencing to October 3, 2024. By joint letter datedCase 1:23-cr-00418-MKB Document 40 Filed 10/01/24 Page 9 of 21 PageID #: 1837August 27, 2024, Aurelien and the Government requested that sentencing be adjourned to a date on or after October 15, 2024 (ECF Doc. No. 39), and the Court adjourned sentencing to October 15, 2024.I. THE PSR’S SENTENCING GUIDELINES CALCULATION OVERSTATES THE LOSSThe PSR calculates the Guidelines range as follows (PSR, ¶¶ 32-43):| Base Offense Level | 6 |
| Loss in Excess of $1,500,000 | +16 |
| Mass Marketing | +2 |
| Committed Outside the United States | +2 |
| Adjusted Offense Level | 26 |
| Zero-Point Offender | -2 |
| Acceptance of Responsibility | -2 |
| Timely Acceptance of Responsibility | -1 |
| Total Offense Level | 21 |
The PSR’s Guidelines calculation results in a range of imprisonment of 37 to 46 months (PSR, ¶ 70). Pursuant to his plea agreement, Aurelien agrees to the Total Offense Level, except for the 16- point increase based on an alleged loss exceeding $1,500,000, pursuant to USSG § 2B1.1(b)(1)(I) (Plea Tr. 38:4-24).A. The Court Should Not Use Gain as an Alternative to LossAurelien objects to the PSR’s loss amount enhancement, which increases the Adjusted Offense Level by 16 points.17 As a threshold matter, the PSR mischaracterizes the Developers’ alleged gain as “intended loss” (PSR, ¶ 27). According to Application Note 3(A)(ii) to § 2B1.1,17 Other than the loss calculation, Aurelien’s only objection to the PSR is the double-counting of his apartment in Dubai in Paragraph 66. He owns only one apartment in Dubai, with a fair market value of $300,000 to $350,000.Case 1:23-cr-00418-MKB Document 40 Filed 10/01/24 Page 10 of 21 PageID #: 1848“[i]ntended loss means the pecuniary harm that the defendant purposely sought to inflict.” For purposes of determining the loss pursuant to USSG § 2B1.1(b)(1)(I), the PSR has adopted the Complaint’s allegation that the Developers withdrew and transferred $2,921,980 (Compl., ¶ 20(b); PSR, ¶¶ 19(b), 27, 33). Thus, the amount cited, $2,921,980 (see PSR, ¶ 27), does not represent “intended loss,” but rather, the Developers’ alleged gain from the sale of the MAP NFTs before they “pulled the rug.”Application Note 3(B) to Section 2B1.1 of the Sentencing Guidelines provides that “[t]he court shall use the gain that resulted from the offense as an alternative measure of loss only if there is a loss but it reasonably cannot be determined” (emphasis added). See also United States v. Romano, 794 F.3d 317, 339 (2d Cir. 2015) (“We interpret the Guidelines’ stated precondition for consideration of gain—i.e., that ‘there is a loss but it reasonably cannot be determined,’ Guidelines § 2B1.1 Application Note 3(B) (emphasis added)—as hypothesizing (a) an actual loss that (b) cannot reasonably be determined as to amount.”); United States v. Byors, 586 F.3d 222, 225–26 (2d Cir. 2009) (“Application Note 3(B) provides that loss may be calculated based on the gain realized by the wrongdoer ‘only if there is a loss but it reasonably cannot be determined.’”). In this case, Aurelien respectfully submits that the Court reasonably can determine the loss incurred by the Purchasers as a result of the offense conduct, and therefore, the Developers’ alleged gain should not be substituted for such loss.B. The Loss is the Value of the Benefits Not ConferredHere, the Court can reasonably determine the loss incurred by the Purchasers by calculating the value of the Benefits that were not conferred. The Developers withdrew the proceeds of the MAP project without distributing the following Benefits: the MAP merchandise collection; the MAP token with staking features; and the acquisition of metaverse land. Each of these BenefitsCase 1:23-cr-00418-MKB Document 40 Filed 10/01/24 Page 11 of 21 PageID #: 1859has an ascertainable value. First, the value of the MAP merchandise collection is zero or nearzero, because the MAP merchandise was not a free giveaway; Purchasers would be required to pay for the MAP merchandise. Thus, by virtue of the offense conduct, the Purchasers only lost the right to purchase MAP merchandise, which has only de minimis value.Second, the value of the MAP token is also de minimis. Although the PSR states that “certain staking platforms for cryptocurrencies offered investors above market returns of ranging from 10% to more than 50% for more obscure digital tokens” (PSR, ¶ 14(c)), only the most popular and successful NFT projects have generated such returns, especially after the 2022 collapse of the NFT and cryptocurrency markets.18 In essence, then, the value of a MAP token with staking features was contingent on the long-term success of the MAP project. And as demonstrated by the MAP and NFT-wide market collapse, this precondition for the success of the MAP token was never satisfied, irrespective of the offense conduct, as discussed in Section I.C., infra.Third, metaverse land, like NFTs and cryptocurrencies, peaked in value around the time of the offense conduct, and then similarly collapsed.19 At their peak, parcels of the metaverse land Otherdeeds for Otherside, sold by Yuga Labs, the creators of BAYC, cost 5 ETH, but have since18 See, e.g, “What is NFT Staking and How to Earn Income From NFTs?” SoluLab, https://www.solulab.com/what-is-nft-staking-and-how-to-earn-income-from-nfts/ (“The best NFTs to Stake are those with high value and strong market demand. These NFTs typically offer better rewards and more stable returns when staked.”); Abu Hena Mostofa Kamal, “Explore the Best NFT to Stake in 2024,” bdtask (Sep. 18, 2024), https://www.bdtask.com/blog/best-nft-tostake.19 See Martin Young, “Metaverse ‘Virtual Land Barons’ Down Bad in 2023 as Prices Decline Further,” BeInCrypto.com (May 26, 2023), https://beincrypto.com/metaverse-virtual-landbarons-down-2023-prices-decline/; see also Tharmaraj Rajandran, “Metaverse Land Prices Plummet by Nearly 95% From Peak Values,” CoinGecko (Aug. 6, 2024), https://www.coingecko.com/research/publications/metaverse-land-prices.Case 1:23-cr-00418-MKB Document 40 Filed 10/01/24 Page 12 of 21 PageID #: 18610declined to less than 1 ETH.20 In 2022, the average floor price for parcels of this metaverse land was 1.98 ETH, or approximately $5,700, based upon the PSR’s contemporaneous exchange rate. Thus, based on these comparisons, the value of the metaverse land the Developers failed to purchase on behalf of the Purchasers was a few thousand dollars, at most.In sum, the Court can reasonably determine the loss incurred by the Purchasers as a result of the offense conduct, and Aurelien respectfully submits that such loss is less than the Guidelines threshold for any increase in offense level.C. The Developers’ Alleged Gain is Not Actual LossTo the extent the Court relies on the PSR’s assertion of the $2,921,980 amount as an accurate calculation of the loss in this case, the available evidence disproves this notion. As a threshold matter, there can be no dispute that each of the Purchasers received a thing of value in exchange for the purchase price of the MAP NFTs. Indeed, for weeks after the MAP NFT mint, many of the Purchasers resold their NFTs at a price above the original purchase price of 0.15 ETH.21 Thus, any argument that the $2,921,980 amount constitutes actual loss, and by extension, that the MAP NFT project was a total loss, is meritless.In addition, the overall decline in the value of the MAP NFTs is largely attributable to market forces, irrespective of whether any Benefits were conferred. By a stroke of extremely unfortunate timing, the MAP NFT mint coincided with the well-documented collapse of interest in and demand for NFTs market-wide. According to Google Trends, interest in NFTs overall20 Tharmaraj Rajandran, “Metaverse Land Prices Plummet by Nearly 95% From Peak Values,” CoinGecko (Aug. 6, 2024), https://www.coingecko.com/research/publications/metaverse-landprices.21 See Brody Decl., Ex. B.Case 1:23-cr-00418-MKB Document 40 Filed 10/01/24 Page 13 of 21 PageID #: 18711dropped by nearly 70% from a late January 2022 high to early March,22 the period coinciding precisely with the MAP NFT mint. The volume of trading on major NFT marketplaces also declined precipitously during the same period.23 Thus, the decline in the value of the MAP NFTs simply mirrored a market-wide trend, regardless of whether the Benefits were distributed to the Purchasers.Furthermore, the resale price history of the MAP NFTs demonstrates that there is no causal connection between the distribution of Benefits and the value of the MAP NFTs. The Developers’ post-mint efforts to buoy the resale value, which included an additional $500,000 spent on postmint marketing, in satisfaction of the promised “[c]ommunity wallet for marketing campaigns and raffles among our holders,” were unsuccessful in the face of the aforementioned market-wide decline in the value of NFTs. Furthermore, subsequent events related to the provision of Benefits had no effect on the value of the MAP NFTs. For example, if the value of the MAP NFTs was inextricably intertwined with the prospective distribution of the Benefits, then the resale value should have fallen after the public admission of a rug pull on June 4, 2022 (see PSR, ¶ 20). However, resale prices of the MAP NFTs doubled in the weeks following this announcement, with an accompanying increase in resale volume.24Conversely, positive news about the provision of Benefits should have increased the resale value of the MAP NFTs. But after the September 28, 2022 announcement of the imminent arrival22 See Google Trends, https://trends.google.com/trends/explore?date=today%205- y&geo=US&q=nft&hl=en.23 See Raphael Minter, “Google Trend Data for ‘NFT’ Shows Global Interest Slashed by 70%,” BeInCrypto.com, https://beincrypto.com/google-trend-data-nft-shows-global-interest-slashed- 70/.24 See Brody Decl., Ex. B.Case 1:23-cr-00418-MKB Document 40 Filed 10/01/24 Page 14 of 21 PageID #: 18812of MAP merchandise,25 resale prices declined.26 Similarly, resale prices again declined after the actual arrival of MAP merchandise on October 12, 2022.27 28 And resale prices dropped again after the November 1, 2022 announcement of a 48-hour artwork giveaway.29 30In summary, publicly available evidence demonstrates that there was no significant relationship between the value of the MAP NFTs and the delivery (or failure to do so) of the Benefits. Accordingly, any loss incurred by the Purchasers should be assessed based solely on the ascertainable value of the Benefits themselves.II. THE 18 U.S.C. § 3553(a) FACTORS FAVOR A NON-CUSTODIAL SENTENCEEven if the Court adopts the PSR’s loss calculation, Aurelien respectfully requests that the Court heed the PSR’s recognition that “the guideline range may overrepresent the seriousness of the offense and the defendant’s overall culpability” (PSR, ¶ 82), and depart downward from the Guidelines range to impose a sentence sufficient, but not greater than necessary, to achieve the purposes of sentencing set forth in 18 U.S.C. § 3553(a). See Kimbrough v. United States, 552 U.S. 85, 90 (2007) (“In accord with 18 U.S.C. § 3553(a), the Guidelines, formerly mandatory, now serve as one factor among several courts must consider in determining an appropriate sentence.”); Gall v. United States, 552 U.S. 38, 50 (2007) (the Court “may not presume that the Guidelines range is reasonable” and “must make an individualized assessment based on the facts presented.”).25 See Brody Decl., Ex. C.26 See Brody Decl., Ex. B.27 See Brody Decl., Ex. D.28 See Brody Decl., Ex. B.29 See Brody Decl., Ex. E.30 See Brody Decl., Ex. B.Case 1:23-cr-00418-MKB Document 40 Filed 10/01/24 Page 15 of 21 PageID #: 18913There is ample precedent for the Court to make such a downward departure under the circumstances presented in this case. “Where the Commission has assigned a rather low base offense level to a crime and then increased it significantly by a loss enhancement, that combination of circumstances entitles a sentencing judge to consider a non-Guidelines sentence.” United States v. Algahaim, 842 F.3d 796, 800 (2d Cir. 2016) (remanding “to permit the sentencing judge to consider whether the significant effect of the loss enhancement, in relation to the low base offense level, should result in a non-Guidelines sentence”). Here, as discussed supra, the PSR’s loss amount enhancement of 16 points constitutes more than three-quarters of the Total Offense Level. Accordingly, Aurelien respectfully requests that the Court impose a non-Guidelines, non-custodial sentence.A. The Nature and Circumstances of the Offense and the History and Characteristics of the Defendant Weigh in Favor of a Non-Custodial SentenceIn this case, the nature and circumstances of the offense weigh in favor of a non-custodial sentence. As discussed supra, this is not a case where the Developers withdrew from the MAP project without providing the Purchasers anything of value. Rather, the Purchasers all received their MAP NFTs, and many Purchasers were able to profit from their resale before the NFT market collapsed.31Aurelien’s history and characteristics also weigh in favor of a non-custodial sentence. Most importantly, Aurelien has no prior criminal history (PSR, ¶¶ 44-49). He is a 26-year-old French national, with minimal ties to the United States, who has done his best to keep busy and be productive during the pendency of this case (PSR, ¶¶ 50-51, 63). And as the letters written on his behalf demonstrate,32 he is a dedicated son, brother, and friend, whose loved ones support him31 See Brody Decl., Ex. B.32 See Brody Decl., Exs. F-M.Case 1:23-cr-00418-MKB Document 40 Filed 10/01/24 Page 16 of 21 PageID #: 19014(PSR, ¶¶ 51-52) and will ensure that he does not engage in any future unlawful conduct. Mathis, Aurelien’s younger brother, writes that “overall, Aurelien embodies the virtues of kindness, generosity and peace. His presence enriches the lives of those around him, and his character is a testament to his unwavering commitment to creating harmony and happiness wherever he goes.”33 The letters from Aurelien’s friends and family mention his overwhelming kindness, with his friends emphasizing that he is a person “who brings people together … and embodies joie de vivre,”34 having a “contagious energy.”35 Aurelien’s long-lasting friendships with people he has known since he was very young are a testament to his loyalty and the strong support system that awaits him back home in France. His long-time friend and former soccer teammate speaks to Aurelien’s meaningful relationships: “Aurelien is a person who is and will continue to be well supported by his family and friends, whatever happens….”36 His concerned grandparents, who have stayed in touch with him throughout this process, write that for them, “it’s very important to support him in this difficult period.”37Since his arrest, Aurelien has spent much of his time reflecting and focusing on selfimprovement. His father writes that this experience has enabled Aurelien to “turn inward” and realize his shortcomings.38 Aurelien’s girlfriend shares that, since his arrest, Aurelien has “adopted a healthier lifestyle” and has grown tremendously.39 His aunt, who visited with Aurelien in New33 See Brody Decl., Ex. F.34 See Brody Decl., Ex. G.35 See Brody Decl., Ex. H.36 See Brody Decl., Ex. I.37 See Brody Decl., Ex. J.38 See Brody Decl., Ex. K.39 See Brody Decl., Ex. L.Case 1:23-cr-00418-MKB Document 40 Filed 10/01/24 Page 17 of 21 PageID #: 19115York following his arrest, reports that during her visit, she “could see that he was determined to become a better man.”40 Aurelien has truly demonstrated to his close friends and family that he has used this experience to make positive changes in his life and take steps towards a better future for himself.B. A Non-Custodial Sentence Reflects the Seriousness of the Offense, Provides Just Punishment, and Affords Adequate DeterrenceAlthough Aurelien fully understands the seriousness of the offense, the particular circumstances of the offense conduct in this case, as discussed supra, do not require the imposition of a custodial sentence to provide just punishment. Judge Weinstein’s decision in United States v. Galtieri, No. 13-CR-00508-001, 2015 WL 5178710, at *3 (E.D.N.Y. Sept. 3, 2015), is instructive. In Galtieri, the defendant pled guilty to conspiracy to commit wire fraud and conspiracy to commit bank fraud, with losses estimated at $1.5 million and almost $400,000, respectively. Id. at *1. The Guidelines range was 51-63 months of imprisonment, based on a total offense level of 24. Id. at *1-*2. However, the court held that “[a] custodial sentence is unnecessary,” that “Defendant appears to be a productive member of society who has led a good life but for these two serious crimes,” and sentenced the defendant to time-served of one day and three years of supervised release. Id. at *3.41 Here, even if the Court adopts the PSR’s loss calculation, Aurelien’s total offense level is lower than Mr. Galtieri’s, and he has already served a month in jail and six months of home confinement, as opposed to the single day served by Mr. Galtieri.40 See Brody Decl., Ex. M.41 The fact that the Government submitted a 5K1.1 letter in Galtieri does not appear to have played a significant role in Judge Weinstein’s sentencing decision. Indeed, the Galtieri decision’s first mention of the 5K1.1 letter occurs after the pronouncement that “[a] custodial sentence is unnecessary.” See id. at *3.Case 1:23-cr-00418-MKB Document 40 Filed 10/01/24 Page 18 of 21 PageID #: 19216Furthermore, the need for both specific and general deterrence is satisfied by a noncustodial sentence in this case. With respect to specific deterrence, it is an understatement to say that Aurelien has learned his lesson. This young man, with no criminal history and minimal familiarity with the U.S. criminal justice system, as well as limited facility in English, spent a month at Metropolitan Detention Center, the harsh conditions of which are well-documented. See, e.g., United States v. Parish, No. 13 Cr. 829 (AT), 2024 WL 3904626, at *5 (S.D.N.Y. Aug. 22, 2024) (“The conditions at MDC … include near-perpetual lockdowns that prohibit detained persons from leaving [their cells] for visits, calls, showers, classes, or exercise—conditions that are tantamount to solitary or near-solitary confinement.” (internal citations and quotation marks omitted)); United States v. Colucci, No. 23-CR-417 (GRB), 2024 WL 3643857, at *1 (E.D.N.Y. Aug. 5, 2024) (“the [sentencing] determination is further complicated by an extrinsic factor that looms large in nearly every bail and sentencing determination made in this judicial district: the dangerous, barbaric conditions that have existed for some time at the Metropolitan Detention Center (“MDC”) in Brooklyn.”).Upon his release from detention, Aurelien spent more than six months under home confinement, thousands of miles from his family and friends. In total, Aurelien has remained in the U.S. for almost two years since his arrest, with limited visitation from family and friends, most of whom live in France or beyond. And whether this Court sentences Aurelien to a term of imprisonment or not,42 his guilty plea virtually ensures that, as a non-citizen, he will be deported (see PSR, ¶ 55), with any future reentry into the U.S. unlikely. Thus, the consequences of42 Pursuant to Aurelien’s plea agreement, the Government has agreed to support an application to transfer any custodial sentence imposed to be served in France.Case 1:23-cr-00418-MKB Document 40 Filed 10/01/24 Page 19 of 21 PageID #: 19317Aurelien’s conduct have been significant for him and his loved ones, and no further punishment is necessary to deter Aurelien from any future unlawful conduct.With respect to general deterrence, Aurelien respectfully submits that the Court’s should consider several factors in concluding that a non-custodial sentence is sufficient. First, market forces have reduced the necessity of deterring others from perpetrating NFT frauds. Simply put, there is little money to be made in NFTs, fraudulently or otherwise. Second, Aurelien’s case has been well publicized, both in mainstream media43 and niche cryptocurrency and NFT industry publications.44 Thus, the consequences of his conduct and his ordeal in the U.S. criminal justice system are well known in the NFT industry and the public more broadly. Accordingly, general deterrence will be satisfied by a non-custodial sentence.CONCLUSIONFor all the foregoing reasons, Aurelien respectfully requests that the Court impose a noncustodial sentence, whether or not the Court agrees with the PSR’s loss calculation. Aurelien respectfully submits that the Court should reduce the Adjusted Offense Level (Subtotal) by 16 levels based on a loss of less than $6,500, which would result in a Total Offense Level of 5 and an advisory Guidelines range of 0-6 months. Alternatively, even if the Court adopts the PSR’s loss43 See, e.g., John Annese, “Mutant Ape Planet NFT founder pleads guilty to fraud in Brooklyn court,” NY Daily News (Nov. 14, 2023), https://www.nydailynews.com/2023/11/14/mutant-apeplanet-nft-founder-pleads-guilty-to-fraud-in-brooklyn-court/; Damien Leloup, et al., “US charges French national Aurélien Michel over NFT fraud,” Le Monde (Jan. 11, 2023), https://www.lemonde.fr/en/france/article/2023/01/11/french-national-aurelien-michel-chargedin-nft-fraud-in-the-united-states_6011133_7.html.44 See, e.g., Jesse Hamilton, “‘Mutant Ape Planet’ NFT Developer Pleaded Guilty in $3M Fraud,” CoinDesk (Nov. 14, 2023), https://www.coindesk.com/policy/2023/11/14/mutant-apeplanet-nft-developer-pleaded-guilty-in-3m-fraud/; Julia Smith, “‘Mutant Ape Planet’ NFT Designer Pleads Guilty to Fraud, Faces 5 Years in Prison,” Cryptonews (Nov. 14, 2023), https://cryptonews.com/news/mutant-ape-planet-nft-designer-pleads-guilty-to-fraud-faces-5- years-in-prison/.Case 1:23-cr-00418-MKB Document 40 Filed 10/01/24 Page 20 of 21 PageID #: 19418calculation, Aurelien respectfully requests that the Court heed the PSR’s recognition that “the guideline range may overrepresent the seriousness of the offense and the defendant’s overall culpability” (PSR, ¶ 82), and depart downward from the Guidelines range to impose a sentence sufficient, but not greater than necessary, to achieve the purposes of sentencing set forth in 18 U.S.C. § 3553(a).When the Court considers the Section 3553(a) factors, a non-custodial sentence is sufficient to achieve the statutory purposes of sentencing. “In view of the excessive incarceration rates in the recent past and their unnecessary, deleterious effects on individuals sentenced, society and our economy, justifiable parsimony in incarceration is prized.” Galtieri, 2015 WL 5178710, at *2. Aurelien has the rest of his life ahead of him, and he respectfully requests that the Court allow him to move on and become a productive member of society.Dated: New York, New YorkOctober 1, 2024Respectfully submitted,MINTZ & GOLD LLPBy: /s/ Adam K. BrodyIra Lee Sorkin Adam K. Brody600 Third Avenue, 25th FloorNew York, NY 10016212-696-4848sorkin@mintzandgold.combrody@mintzandgold.comAttorneys for Defendant Aurelien Michelcc: Counsel of recordVia ECFCase 1:23-cr-00418-MKB Document 40 Filed 10/01/24 Page 21 of 21 PageID #: 195
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